Gross domestic product figures released Friday confirmed what many investors had feared: Japan's economy is in the midst of its deepest recession in over 50 years.

The world's second-largest economy recorded its worst year in 1997 since the end of World War II, contracting 0.7 percent, the Economic Planning Agency said.

That sent investors scurrying for cover, dumping yen for dollars. One concern is that Japan may be forced to cut interest rates from already historic lows.

An interest rate cut would make overseas investments look more attractive because of their relatively higher rates of return. While the Bank of Japan's policy board decided Friday to leave rates unchanged, traders pointed out the vote wasn't unanimous, with some favoring a cut.

``If some members are actually in favor of credit easing, that would certainly accelerate investment in foreign bonds by institutional investors,'' said Ryuichi Takami, a senior trader at Sanwa Bank Ltd.

There is also increasing doubt that Japan's central bank could stem the yen's fall even if it follows through on threats to intervene in currency markets. Japan's economic fundamentals are simply too weak, and other countries have shown little enthusiasm for propping up the yen.

``Even if there is intervention, it will be solo,'' said Seiji Masumoto, a dealer at Nippon Trust Bank Ltd.

On the Tokyo Stock Exchange, stocks fell amid worries the weakening yen may throw the rest of Asia into renewed economic turmoil.

The Tokyo Stock Price Index of all issues listed on the first section ended down 10.04 points or 0.85 percent, at 1,167.21. The TOPIX closed down 1.56 points, or 0.13 percent, on Friday.

A weak yen helps Japan's exporters at the expense of the rest of Asia. As the yen falls, Japanese products become cheaper in key markets like the United States, snatching market share from Asian competitors.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.